9 October 2008
Interview with Marianne Go (The Philippine STAR), Estrella Torres (Business Mirror) and Felipe Salvosa (BusinessWorld)
REPORTER: What is the continued delay in Australia’s approval of the Import Risk Analysis?
CREAN: It is a time table that has been set for that Import Risk Analysis to be completed, referred to the Eminent Scientists Group and then for that report to be released. We would expect that the conclusion of that report would be sometime next week.
REPORTER: What would be the chances sir of this going to be positive for the Philippines?
CREAN: I can’t pre-empt the report. The report is to be based on the scientific assessment that says it should be. Whilst we understand the frustration associated with the length of time, this is an issue that we inherited. But we cannot change the process. The process was set. It has to run its course, it will run its course. And we had discussions about that today.
REPORTER: If this wants to be expanded, are there other Import Risk Analysis on other Philippine products entering the Australian market?
CREAN: Obviously, if there is a risk in the import of the product, it will be subject to a risk analysis. But what we have talked about is a mechanism by which we can get approval for accreditation to be undertaken here consistent with our standards. That is something that we have made a good discussion about today.
We also, on coming to office, commissioned a review into our Quarantine Service. That review was itself handed to the Minister on September 30th and the cabinet will consider recommendations associated with the response to that review.
Indeed, when that review was undertaken, in the terms of reference that required in amongst other things, to look to the circumstances of our trading partners, we invited our trading partners to make the submission. The Philippines took up that offer and made a submission to that review.
REPORTER: Regarding the Australia-New Zealand FTA with ASEAN, is it going to require a bilateral agreement for Philippines and Australia?
CREAN: I think what it does is to provide a new framework in which the bilateral relationship can be strengthened. The bilateral relationship is underdone. You heard the statistics in there that in the last decade, growth in trade with ASEAN as a whole is in the order of a 130 per cent, with the Philippines only 17 per cent. Two-way trade with ASEAN as a whole is $71 billion, the share with the Philippines is but $2.5 billion.
When you look at the people movements, when you look at the complementarities, when you look at the large Filipino population in our country, one per cent is the composite diaspora in Australia.
And when you look at the size of the untapped mining sector in this country with the fact that the Australian mining sector has world best practices, not only in mining technologies, but in managing the land-related issues, there is clearly area for huge further cooperation. And the mining issue is another aspect of the trade relationship but the ASEAN free trade agreement provides a time table for the reduction in tariff barriers between our countries. So when the automotive sector and the agri-food business, in the services sector such as medical services, nursing, such as education services, financial services—these are all areas that we should be able to develop a much stronger trading and investment climate for between our two countries. Why? Because we got a more liberal trade framework. What we’ve now got to do is to enhance that more liberal trade framework and to make sure that we apply the combined efforts, far more successfully, to strengthening the private relationship that we have seen over the last decade or so.
REPORTER: Could you please elaborate on your earlier comment with that concern what the Philippines should address with regards to mining licenses and royalties... you mentioned that in your speech this morning.
CREAN: Clearly, there have been issues raised by our mining interests that generally fit into two categories. One is the approval process; the other is the issues associated with the royalty shares to local government. There are other issues with local government beyond the royalties, that’s true. They go to the environmental dimensions, the land management issues. What I think we have come away from the discussions over the last three days, what has come out of those discussions, is that there clearly is a realisation on the part of the Philippines Government that these are issues that need to be addressed and we have talked about mechanisms for addressing them—mechanisms for trying to have a more effective clearing process for the approvals exercise but one that engages, in a more coordinated way, the local interests. Not to ignore them, but to coordinate them more effectively. To inform about the nature of the development and to try and expedite the approval process.
REPORTER: Do you see mining as a component of trade that would expand the Philippines export trade to Australia?
CREAN: No I think that what will see is an expansion of investment in the mining. We don’t need to import resources. We’ve got plenty of them! We have got more than anyone else of them. We’re exporting them to other countries but we can’t supply the full requirements. That is why the price of commodities is so high. So it is in our interest to try to contain inflationary pressures, which is a global phenomena. It is in our interest to try to create a better match between supply and demand for resources but in the process of doing that there are clear export and investment opportunities for Australian firms.
REPORTER: Even in the basis of current financial turmoil in the US and Europe is already beginning to affect Asia, do you foresee the inflow of Australian investment in Philippine mining sector at this time and also in the face of this concerns that you are addressing so when I’m asking that is it when can we see more of this Australian investment in the mining sector?
CREAN: That is up to how successful we are in facilitating, out of this PAMM meeting, the process going forward. Clearly there is interest on the part of Australian miners, there has been for some time. Now will that be impacted by the global economic downturn? To some extent it will but the truth is that even through the gloom and doom, the IMF report overnight still is projecting economic growth as a plus even though it will be not as strong as previous. In Asia and particularly in countries such as China whilst there will be reductions in the projected growth rate, there will still be growth in the order of nine – nine-and-a-half per cent something that the..
REPORTER: Sorry nine to nine-and-a-half per cent for China?
CREAN: You read the IMF report. I haven’t got it with me at the moment. For here in the Philippines I still think they are talking five per cent. In KL, in Malaysia, where we were the day before, they were still looking at coming down from seven plus to four-and-a-half to five per cent. So it is still strong growth and that growth will demand our resources. So there is going to be a growing demand for resource based economies and its therefore in our interest – even in the context of the downturn. But mining decisions take a long time to come on stream. So this is the time to really be trying to work seriously to build some much needed confidence in the market to understand that there will be big demand going forward and that there is big trade and investment opportunity if we get the process right.
REPORTER: What about investments in petroleum, do you mentioned one petroleum exploration in Palawan, is this going to increase more exploration?
CREAN: I didn’t mention, where?
REPORTER: Minister Smith mentioned this morning
CREAN: Is this the one that was produced today? I don’t know. Is this the one that got oil flowing today?
OFFICIAL: That’s NIDO petroleum and more of our companies are getting exploration acreage in the Philippines so we expect more and more.
REPORTER: More in the pipeline?
CREAN: Obviously petroleum resources. There’s a big opportunity to pursue those there because where the price is now makes it much more attractive to explore and produce. Now the trouble with that is that with the high price it also adds very significant lead to inflation costs. At least out of this downturn there have been some fall-off in prices for petroleum but they still are attractive and there is a lot of interest in developing the resources here.
REPORTER: Has there been talk of a time frame for the setting up of this centre for creating mechanism?
CREAN: No we talked of acting out of this meeting to try to set in place an effective process immediately but Peter Favila is the lead agency in terms of this facilitation mechanism. There obviously has to be discussions as well with Mr. Atienza, but I think that the last couple of days have been important information. The fact that we as ministers met with business delegations from the Philippines and Australian interests, the fact that they were able to raise these concerns, I think is important. Both governments understand the need to address concerns where they are raised by the business community as barriers to their decisions to invest. We’ve got a responsibility to try and improve the framework, to make the framework a lot more conducive to helping their investment decisions.
REPORTER: If you fix that then can we see more Australian investments in mining companies in the next five years?
CREAN: Obviously that is the aim of getting this process right, to encourage greater investment because the development of the mineral resources in this country has been underdone. Only about two per cent of the resource base has been developed and there is a demand. What we need to do is make sure it’s mined efficiently and competitively and that is where Australia, if the approvals process and the concerns associated with that are addressed, that’s where Australia can provide real opportunity not just for the Philippines but for themselves. It’s a win-win outcome.
Thank you.
ENDS
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